IRS Insanity

12.07.12

Tax Assessment for Rauschenberg Art Work Shows Federal Tax Excesses

Barred by U.S. preservation law from ever selling the Rauschenberg ‘treasure’ it owned, the Sonnabend family valued it at zero, but the government ruled it was worth far more, and slapped a $41 million tax bill on the family—an example of taxation run amok, says Michael Medved.

Only once in a great while will a single story simultaneously illuminate the embarrassing excesses of both low politics and high culture, but the troubling true tale of the tax man and the taxidermist, the stuffed bird and the feathered federal nest, nicely captures the demented nature of recent trends in both Washington and Manhattan.

The New York Times hailed the purportedly happy ending of the strange saga with the exultant front-page headline: “MoMA Gains Treasure That Met Also Coveted.” For benighted souls consigned to the wastelands west of the Hudson, “MoMA” of course denotes the Museum of Modern Art, while “Met” in this context means Metropolitan Museum of Art, not to be confused with the Metropolitan Opera or, for that matter, National League knuckleballer R.A. Dickey.

In any event, the “treasure” in question is a “combine” assembled by pop-art pioneer Robert Rauschenberg in 1959 during a celebrated stage in his career when he collected trash and found objects from the streets of New York City and assembled, colored, and redecorated them in unexpected ways. The collage in question, mystifyingly designated Canyon, portrays no recognizable geological features, but does bring together pieces of wood, fabric, paint, cardboard, personal photographs, string, a mirror, and a droopy, dirty pillow cinched into two spherical halves and resembling ... well, whatever comes to mind when two circular shapes dangle just below the chief center of attention.

And that focus—a stuffed, dark and malevolent bald eagle swooping straight toward the viewer—caused most of this fabled artwork’s tangle of trouble. Like all bald eagles, in whatever stage of life or decay, the winged messenger of Canyon falls under the purview of two different pieces of well-intentioned federal legislation: the 1940 Bald and Golden Eagle Protection Act, and the 1918 Migratory Bird Treaty Act.

These laws strictly forbid human profit from any sale or trade of eagles, eagle carcasses, or even eagle parts, in efforts to shelter our noble national symbol from its endangered status some 70 years ago. The rules still apply to Rauschenberg’s raptor relic, despite the bald eagle’s vaunted recovery in recent decades, and despite the fact that the artist delivered a notarized letter in 1988 certifying that his borrowed bird had been killed and preserved by one of Theodore Roosevelt’s original Rough Riders before the applicable rules went on the books.

Those regulations naturally prohibited the sale of the modern masterpiece, which, for nearly 50 years, occupied a place of pride in the collection of one of its original owners, legendary collector and sometime gallery owner Ileana Sonnabend. But when this Romanian immigrant and influential “Queen of Pop” shuffled off her mortal coil at age 92 in 2007, her heirs got an appraisal of the famous piece that found it, quite literally, priceless—since you can’t attach a price or a monetary worth of any kind to a piece that the government won’t allow you to sell under any circumstances.

The Sonnabend spawn did manage to avoid the $41 million tab by donating Canyon to MoMA, where it will be displayed in ‘conversation’ with five other Rauschenberg combines.

Unfortunately for Ms. Sonnabend’s daughter and adopted son, however, the discerning connoisseurs of the Internal Revenue Service strongly disagreed with the family’s appraisal of the value of the piece as zero and instead imposed their own valuation of a cool $65 million. This meant a tax bill of $29.2 million, plus a fine of another $11.2 million as an “undervaluation penalty,” plus accrued interest.

In other words if the Sonnabend heirs wanted to keep the family treasure they would need to come up with more than $41 million for the privilege of holding on to a painting that no subsequent owner could ever attempt to sell at the risk of arousing the righteous wrath of federal eagle-carcass regulators.

This dilemma became especially acute because the heirs had already sold off the majority of Mama’s beloved art collection in order to pay another bill for federal and New York State death taxes amounting to $471 million. This revelation emerges at a time when Congress debates the imposition of even higher, more punishing inheritance taxes as part of the ubiquitous “fiscal cliff” crisis in Washington. If our elected representatives do nothing, then any estate worth more than a million bucks would need to pay 55 percent of that excess to Uncle Sam as part of taking possession of a designated inheritance.

In other words, the funds-hungry feds would force the sale of not just lavish collections of modern art but literally thousands of homes or small businesses with a net valuation above a million dollars. This prospect alarms many Democrats as well as Republicans, leading veteran senators like Louisiana’s Mary Landrieu to insist on an exemption of $10 million, not $1 million, before the IRS carves out its share.

The globe-trotting survivors of a fashionable art-world doyenne (who in 1972 sanctioned two weeks of nonstop masturbation in her gallery as part of performance piece called “Seedbed”) might not be the ideal poster children for efforts to cut back the tentacles of the hated death tax. But even if Ileana Sonnabend (and her ex-husband, Leo Castelli) collected art that might look flashy, trashy and, to use an old-fashioned and politically incorrect word, ugly, to the eyes of the untutored, they obviously loved, or at least valued, their accumulation of Lichtenstein, Jasper Johns, Andy Warhol, Cy Twombly, Willem de Kooning, and Robert Rauschenberg works that they meant to pass on to their descendants.

By what right should the federal government intrude on a mourning family and force liquidation of their most esteemed assets for the sole purpose of paying a tax bill and avoiding imprisonment? What higher good does it serve to break up an art collection, or a family business, or a hundred-year-old farm or estate, merely to satisfy the demands of an ever-rising IRS burden? And even more outrageously, how could the government dare to squeeze out $41 million as its share of an unsellable stuffed-eagle collage that its own rules render worthless? The deranged dysfunction of the federal bureaucracy makes it virtually impossible for the family to retain its heirloom out of love for either the dead bird, or the dead mother who cherished it.

In the end, the Sonnabend spawn did manage to avoid the $41 million tab by donating Canyon to the Museum of Modern Art, where the august institution will display it in “conversation” with five other Rauschenberg combines, including the famous Bed, a stretched quilt with red paint dribbled over it and meant, supposedly, to suggest violence and rape.

Of course, the former owners of Canyon may feel a bit raped, since they were denied the chance to count their donation as any sort of charitable contribution for tax purposes since, remember, their own appraisal saw its worth as zero. At least they managed to get the museum to place the mother’s name on the Founders Wall, though she had only reached age 15 and not yet launched her collecting passion at the time of the museum’s actual founding.

In any event, it might be interesting to imagine the substance of the conversation among the six pieces to be installed in close proximity to one another. Possibly they might chat about the sad, silly state of contemporary art. Or outrageous overreach on the part of officialdom. Or a twisted tale that amounts to its own sort of combine, assembling ridiculous rules, governmental greed, inspired ugliness, and bumbling bureaucrats in an arrangement so odious that even a stuffed eagle feels impelled to fly away.